Level Of Corruption In Countries Research Articles

Country Level Corruption and Accounting Choice: Research & Development Capitalisation Under IFRS

International Accounting Standard 38 Intangible Assets mandates that development costs must be capitalized if certain conditions specified in the standard are met. However, this requires managerial judgement and hence may be subject to opportunism. Corruption is a permeable informal country characteristic that penetrates firms’ behaviour, influencing corporate misconduct. We conjecture that an environment with high corruption facilitates management in their justification of meeting the capitalization criteria of assets that should have been expensed, either partly or entirely. Effectively, these capitalized assets will not generate the future economic benefits implicitly conveyed by their recognition. This recognition, however, sends positive (albeit distorted) market signals for future earnings and increases current year reported earnings. We find that there is a positive relation between country-level corruption and the amount of development costs capitalized in a given year. Moreover, the higher the levels of country corruption, the lower the contribution of capitalized development costs in a given year to future profitability. Finally, this association is moderated by companies’ levels of internationalization.

Cultural Dimension of Corruption: A Cross-Country Survey

This study investigates whether culture plays a major role in determining the corruption levels of countries. The cultural dimensions of Hofstede’s model and the worldwide level of corruption provided by the Corruption Perceptions Index were used. A cross-country survey of 98 countries was conducted using ordinary least squares (OLS) regression. Three of the six main components of Hofstede’s model were found to have a significant influence on corruption, namely power distance, individualism-collectivism, and long- versus short-term orientation. National culture may explain the level of corruption in each of the countries. About half of the level of corruption in countries is explained by the national culture. Governments must acknowledge the role of culture in order to adopt the most appropriate policy decisions to fight corruption.

Uncovering High-Level Corruption: Cross-National Corruption Proxies Using Government Contracting Data

Measuring high-level corruption and government favouritism has been the object of extensive scholarly and policy interest with relatively little progress in the last decade. In order to address the lack of reliable indicators, this article develops two objective proxy measures of high-level corruption in public procurement: single bidding in competitive markets and a composite score of tendering ‘red flags’. Using publicly available official electronic records of over 2.8 million government contracts in 27 EU member states plus Norway in 2009-2014, it directly operationalizes a common definition of corruption: unjustified restriction of access to public contracts to favour a certain bidder. Corruption indicators are calculated at the level of contracts, but produce aggregate indices consistent with well-established country-level corruption indicators. Due to the common EU regulatory framework, indicators are consistent over time and across countries, while WTO regulations underpin global generalisability. Indicator validity is supported by correlations with well-established perception-based corruption indicators, and novel micro-indicators such as prices and supplier registration in tax havens. The utility of the novel indicators is demonstrated by using them to explain the effect of deregulation on corruption risks at the country level. In order to facilitate wide use of the data and indicators by researchers, journalists, NGOs, and governments, they are made publicly available.

MINDING THE GAP BETWEEN EXPECTATIONS AND PERCEPTIONS OF DEMOCRACY

Studies of perceptions of democratic performance and satisfaction with democracy may over estimate effects of electoral rules on attitudes if country-level corruption and income inequality are not accounted for. We use mixed-level models to estimate evaluations of democracy using data from Wave 6 of the European Social Survey. We use new measures of democratic expectations about elections and party systems along with the 'satisfaction with democracy' item to test for effects of electoral rules on perceptions of democracy. We replicate previous studies and find multipartyism and preferential ballot structure correspond with positive evaluations of elections and parties, and greater satisfaction with how democracy is functioning in a person's country. However, these relationships dissipate when we account for corruption and income inequality. This suggests we should exercise caution when linking electoral systems and electoral reforms to democratic legitimacy and perceptions of democratic performance.

The Relation of Corruption Perceptions, Conformity and Traditionalism: Macroeconomic Study of 52 Countries

This paper analyses the relation of the subjective importance of values such as creativity, being rich, taking care of ourselves, helping others, being successful, excitement and adventure, behaving according to rules, taking care of the environment, tradition, living in secure surrounding in countries and the perceived levels of corruption in countries. In addition we study the effects of GDP per capita, and GDP per capita growth on corruption perceptions. We control for the level of education and urbanization. Our results suggest, that the more it is important to always behave properly; to avoid doing anything people would say is wrong, the higher is perceived corruption in the countries. The more it is important to comply with tradition and to follow the customs handed down by one’s religion or family, the higher is the perceived corruption in the countries. The higher is natural logarithm of GDP per capita, the lower is perceived corruption. The higher is GDP growth, the higher is perceived corruption. DOI: 10.5901/mjss.2015.v6n5p15

The Death Penalty: An Effective Anti-Corruption Mechanism?

On the 17th of June 2015, members of a group named 'Voice of the Voiceless' stormed the Nigerian National Assembly and demanded a legislation that would prescribe death penalty as punishment for corruption in the country. In their opinion, there was no way Nigeria would make progress if corruption in public office was not brought under control. This paper seeks to determine if the death penalty can curb corruption in Nigeria?The paper begins with a measurement of the perceived level of corruption in countries where the death penalty is being applied. It compares the corruption score in those countries with that of the corruption score in countries who do not punish corruption via death penalty. The paper will later examine certain measures that could pose a threat to the potential success of death penalty legislation.

Corporate governments: Government connections of public oil and gas companies

It is well known that governments have direct control over much of the energy sector through National Oil Companies (NOCs). Much less understood are the determinants and consequences of government connections of their stock exchange listed counterparts, Public Oil & Gas Companies (POCs). This paper focuses on an important mechanism through which POCs and governments can influence one another: the presence of current and former government employees among POC directors. Specifically, we expect that current government officials serving on POC boards are more likely than other board members to be a channel through which governments influence firms. Former government officials on POC boards, on the other hand, are more likely than other board members to lobby their governments on the companies’ behalf. We collect data on 112 large POCs from 35 countries, and on country and size-matched control firms outside the oil & gas sector. The empirical results provide partial support for our hypotheses. We find that the importance of the energy sector in a country’s economy does not impact the government connectedness of its POC boards. Country-level corruption measures, on the other hand, are positively related to the prevalence of current and former government officials on POC boards’ – and in the case of current officials, significantly more so than for non-energy firms. Lastly, there is some indication that having former government officials on a POC board contributes to the firm’s profitability.

Do Politics in Europe Benefit from Politicising Corruption?

In this article, two unexplored trends in European electoral politics are highlighted. Using newly collected data the article tracks the politicisation of corruption in electoral campaigns from 1981 to 2011, an electoral strategy that has been increasing over time in most European countries. It then empirically tests two aspects of this campaign strategy. First, what are the factors that are systematically associated with a party’s decision to politicise corruption? Second, what are the electoral effects in terms of relative vote share for parties that politicise corruption? Using an original data-set that employs multi-level data (parties nested in countries) the results demonstrate first that politicisation of corruption occurs systematically more often among established parties from the main opposition, new parties and parties on the political right, and occurs as a function of country-level corruption, district magnitude and public party financing. Second, it is found that the main opposition and new parties that use such a campaign strategy make significant electoral gains relative to the previous election compared to parties that do not politicise corruption. Yet gains are offset in low-corruption countries. The findings demonstrate salient implications for research on party systems, corruption studies and democratic legitimacy, among other areas of investigation.

Helping Global Managers Estimate Host-Country Corruption Levels and Institutional Maturity

Currently available measures of corruption levels in countries are based on surveys and include some degree of subjectivity. This paper describes a methodology (to be used together with and in support of survey-based methods) that uses managerial tools to increase objectivity when estimating ethical standards of public institutions and intensity of corruption in autonomous jurisdictions. The methodology is based on a systemic analysis of institutions and of public officials selected to positions of power. In this analysis the hypothesis that non-compliance by public officials is commensurate with non-compliance by the broader population is tested. The methodology examines corruption from the point of view of the host jurisdiction’s ethical and legal framework and examines instances of non- conforming behavior in light of local customs, cultural norms, and legal practices. The case of Brazil illustrates the methodology and provides an example of its application including suggestions to lower corruption levels. Advantages and limitations of the methodology are identified and conditions for its use are discussed.

Engaging in corruption: The influence of cultural values and contagion effects at the microlevel

Previous empirical work on corruption has generally been cross-country in nature and focused on utilizing country-level corruption ratings. By using micro-level data for over 20 European countries that directly measure individual characteristics, corruption experiences, gender roles, trust and values to examine the determinants of corruption, this paper goes beyond the search for associations between various macro factors and perceptions of corruption that is prevalent in the economic literature. One focus of the paper is on how cultural norms such as gender roles and risk preferences influence corruption and whether there are gender differences in the determinants of corruption. In addition, this paper also seeks to determine if there are contagion effects in corruption at the microlevel. Using a seemingly unrelated probit approach, this paper provides empirical estimates of how past experiences with corruption affects both how bribery is viewed and the actual act of offering a bribe.

Engaging in Corruption: The Influence of Cultural Values and Contagion Effects at the Micro Level

Previous empirical work on corruption has generally been cross-country in nature and focused on utilizing country-level corruption ratings. By using micro-level data for over 20 European countries that directly measure individual characteristics, corruption experiences, gender roles, trust and values to examine the determinants of corruption, this paper goes beyond the search for associations between various macro factors and perceptions of corruption that is prevalent in the economic literature. One focus of the paper is on how cultural norms such as gender roles and risk preferences influence corruption and whether there are gender differences in the determinants of corruption. In addition, this paper also seeks to determine if there are contagion effects in corruption at the micro level. Using a seemingly unrelated probit approach, this paper provides empirical estimates of how past experiences with corruption affects both how bribery is viewed and the actual act of offering a bribe.

Can Corrupt Countries Attract Foreign Direct Investment? A Comparison Of FDI Inflows Between Corrupt And Non-Corrupt Countries

Globalization and technological innovations create investment opportunities for enterprises worldwide. While firms pursue foreign direct investment opportunities on a global basis, countries compete to attract foreign direct investment (FDI) inflows. Recent studies suggest that corruption negatively impacts FDI inflows and may act as a tax on foreign direct investment. Transparency International, a non-profit organization, publishes an annual index measuring the perceived level of corruption in countries all over the world. Countries competing for FDI inflows are ranked from least-corrupt to most-corrupt. This paper analyses FDI inflows between the least corrupt and most corrupt countries as determined by Transparency Internationals Corruption Perceptions Index. Using UNCTADs Inward FDI Potential Index and Inward FDI Performance Index this paper assesses and draws conclusions regarding the absolute amount of FDI inflows, FDI inflows adjusted for country size, and FDI inflow potential.

Corruption and concession renegotiations.: Evidence from the water and transport sectors in Latin America

Numerous renegotiations have plagued water and transport concession contracts in Latin America. Using a panel dataset of over 300 concession contracts from Latin America between 1989 and 2000, we show that country-level corruption is a significant determinant of these renegotiations and that the effect of corruption varies depending on the type of renegotiations considered. While a more corrupt environment clearly leads to more firm-led renegotiations, it significantly reduces the incidence of government-led ones. The paper then discusses and tests the likely channels through which these different effects of corruption arise, looking in particular at the interactions between country-level corruption and relevant microeconomic institutions.

Corruption and corporate governance: a cross-national study

This paper examines the importance of country-level corruption in explaining the variation of firm-level corporate governance. Analysis of firm-level corporate governance data and country level corruption data on over 400 companies in 26 countries confirms the hypothesis that corruption has a statistically significant negative impact on the quality of a firm’s corporate governance. One standard deviation increase in country-level corruption is associated with a 0.5 to 0.7 standard deviation decrease in firm-level corporate governance scores

Corruption and valuation of multinational corporations

Abstract This paper examines the relationship between U.S. MNCs' valuation and corruption in countries where the MNCs' foreign subsidiaries are located. We uncover that country-level corruption has a multi-dimensional impact on MNCs' valuation. We find that the impact of intangibles is less pronounced for MNCs operating primarily in corrupt countries, consistent with the view that the lack of property rights protection and information asymmetry problems are more prevalent in corrupt environments. We also find that the expansion of a MNC network dominated by corrupt countries negatively affects MNCs' valuation, suggesting that investors may recognize it as an additional risk. However, more importantly, we find that geographic diversification in corrupt countries significantly increases firm value if the MNC has high levels of intangibles such as technological know-how and marketing expertise. Assuming that transactions costs in corrupt countries are higher, our findings are consistent with the notion that the advantages from internalizing the cross-border transfer of intangibles are greater in the presence of corruption. Our findings remain unchanged when we account for endogeneity at the country-and firm-level, when we use alternative corruption measures, and when we re-estimate models by omitting MNCs with operations in locations with big “negative” shocks during the sample period. Moreover, we show that firms with expertise in dealing with corruption enjoy greater benefits from internalization.

Country level corruption and frequency of issue in the U.S. market

This paper examines if country level corruption affects the size of a country’s stock market and its ability to raise equity capital. Using Transparency International’s ranking of countries based on corruption levels, we relate the corruption index to total market capitalization for a sample of 104 countries and also examine the number and volume of new equity issues in each country across time. Additionally, we examine if corruption affects the frequency of foreign firms’ raising capital in the U.S. We find that the corruption index is not highly correlated to either the number of issues or the total volume of issue. The correlation between the average volume of issue and the TI index suggests that there is no clear cut relation between the corruption index and the likelihood of the firm raising capital abroad.

Corruption in Nigeria: how effective is the corruption perception index in highlighting the economic malaise?

Among the numerous problems facing Nigeria in 21st century is the bad image, which is rightly or wrongly portrayed by the Corruption Perception Indices orchestrated under the framework of Berlin-based Transparency International (TI). In 1999 TI released its annual Corruption Perceptions Index (CPI) ranking 99 countries in order of their perceived levels of corruption with number one being the least corrupt, Nigeria at number 98, was only one rank above its neighbour Cameroon. In a more recent version released in London in October 2003, Nigeria at number 132 – was still only one rank above Bangladesh – even though the number of countries in the latter poll had increased to 133 countries. Typically, a score of less than 5 out of a clean score of 10 reflects perceived levels of corruption among politicians and public officials, while scores of less than 3 out of 10 indicates a high level of corruption. With an abysmal score of 1.3, therefore, Nigeria fits the bill of a highly corrupt country that needs a miracle in order to return its economy to a more governable status. This paper, however, argues that the CPI is not a sufficient indicator of the level of corruption in developing countries such as Nigeria. It adopts a more holistic approach to unmask the entrenched nature of corruption against the background that more often than not only one perspective is reflected in the CPI. Bribery is argued to be another dimension to take into account when designing the CPI, therefore, making it imperative to incorporate the Bribe Payers Index into the CPI calculus in order to present a more holistic and hence more credible measure of corruption levels in countries – especially Nigeria.

Corruption and change: the impact of foreign direct investment

AbstractThis study examines influences on the level of corruption in countries from a strategic perspective. Corruption is one of the country‐level influences on market entry, investment, and other decisions fundamental to strategic management at the international level. The study examines the impact on corruption of change in levels of foreign direct investment (FDI). It uses the Corruption Perceptions Index (CPI) scores computed by Transparency International for 1999 and 2000. Results indicate that the more rapid the rate of change in FDI, the higher the level of corruption. Higher levels of perceived corruption are associated with each of two dimensions of national culture: uncertainty avoidance and masculinity. Research and managerial implications are also discussed. Copyright © 2004 John Wiley & Sons, Ltd.